Managing Risk & Shares

Managing Risk
Every deal, trade, investment or business should be conducted on the basis of a strictly enforced limit risk. That is, you just need to be willing to lose andlimited a fixed amount of money on the investment. You have no control over what the market will do, you have no control over the share price. However, Strange is one of the few factors completely in your control is how much you are willing to lose.
Each time money is invested in a stock, the risk being taken over by that investment action to be identified before the investment is made. Once the risk amount is determined, the next decision is to decide on the method of risk that will be used as part of the investment. Saratoga's Safe Investing Method (TM) uses three alternative methods of risk management.
Each investment has the potential for profit of several times the risk. A strict application of this rule for each investment, the total profit of more than losing end.
You never know if an investment share (or other investment) will benefit when you enter into. Any investment you take therefore a risk-to-reward ratio of less than 1 to 2. Then, even if only half of your investments are winners, you must earn money. It is a good practice to have a minimum of 1 to 3 risk-to-reward ratio target.
Managing money Diversification
There should be a spread of investments (or transactions or deals) be to ensure a profit. If you knew what specific investment or share the best returns in the future, then you have all your money in just that one investment and wait for the return. Unfortunately, no one knows the future, so putting all your eggs in one basket is a very high risk strategy.
Every deal, trade or investment may fail completely. Occasional wants. Rarely will a blue chip company goes bankrupt. These factors are not known up-front at the time of investment. If they were, you would not make that investment.
The warranty for this contingency is to invest in an investment. Only a small percentage of your assets This is called diversification. For example, suppose you had ten different investments each of equal value, and one of them failed completely, then at worst you only lost 10% of your assets. It is likely that you will make an overall positive return for the year, despite this major failure as the other 90% of your assets continues to work for you.
Phil Wengier, VIC, Australia
More details about Successful Investing can be found here Phil Wengier been successfully investing in the financial markets for over 30 years and is the owner of a number of companies. In particular, has Saratoga Pty Ltd on the Internet since 1996 helping many who want to discover how to invest.'re Safe and successful If you want to subscribe to my Savvy Investor newsletter click here

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